County Judge Ed Emmett said the federal agency's lack of interest probably dooms the project, known as Patriots by the Lake. The Housing Authority, a public agency, has spent $6.5 million for 91 acres of land on Lake Houston and more than $700,000 on design and other pre-development costs.

Casey Wallace, who chairs the Housing Authority's board, insisted on Wednesday that talks with the VA are continuing, and said he is confident the agency will secure a lease agreement for facilities the federal agency would operate on the site. Casey could not explain the discrepancy between his assertion and the VA's statement to the Houston Chronicle that the project “does not fit into our priorities at this time.”

On-site VA medical and office facilities would provide convenient access for veterans who choose to live in the development, as well as $9.2 million in annual lease payments that would help finance the project. Plans also include hundreds of homes, patriotic memorials such as a “wall of heroes,” restaurants, shops, a marina and a hotel.

A local VA official expressed enthusiasm about the project when it was announced last year. This week, however, the agency said it is focusing on bringing services to veterans where they now live by opening new clinics in cities throughout the area.

Emmett and Commissioner Sylvia Garcia said they had never seen any evidence, other than the assertions of housing authority leaders, that the VA intended to relocate facilities to Patriots on the Lake.

Emmett said he's been skeptical of the project from the outset. The Housing Authority is not a branch of county government, but Emmett and the commissioners appoint its board and the county administers the federal grants that pay for many of its services.

“From the beginning, just as a concept, I had concerns,” Emmett said. “I never could get a good answer to why that location was chosen.”

Changes at the top

The authority's chief executive, Guy Rankin, said last April that the VA lease agreement was expected to be secured the following month.

Wallace said talks with the VA have gone more slowly than expected, in part because of changes in VA leadership at the local and federal levels.

“It's true we don't have a lease agreement,” Wallace said Wednesday, adding that VA officials, whom he did not name, “are excited about our program.”

Criticism of the project, Wallace said, may be prompted in part by the originality of the concept. But the development would meet vital needs of veterans returning from wars in Iraq and Afghanistan, he said.

“This is red, white and blue,” Wallace said.

E.A. “Buddy” Grantham, director of Mayor Annise Parker's veterans affairs office, said he still believes in the original vision for Patriots by the Lake. The development, he said, would provide a supportive environment for vets to live and work together, “sharing stories and during bad times being there to help each other talk things over.”

Affordable housing advocates also have questioned whether a public housing authority should be developing a project with mostly market-rate housing.

The housing authority's chief operating officer, Marvalette Hunter, told the board last September that home prices would range from $175,000 to more than $750,000, according to board meeting minutes.

Developmental shift

The development also would include 160 subsidized apartments for the elderly.

“This project does not appear to produce affordable housing, at least not for extremely low-income or homeless,” said Earl Hatcher, who works to provide housing for homeless veterans through the nonprofit Housing Corp. of Greater Houston.

“Is this type of project consistent with the original mission of a housing authority?” Hatcher asked.

Wallace and Rankin said Patriots by the Lake exemplifies a shift by public housing agencies toward developing mixed-income developments rather than segregating poor people into projects that often become slums.